RWE Innogy 6/12/2014 PAGE 1
How to promote the necessary
investment in the European energy
transition?Gerd Schräder Regulatory Affairs, RWE Innogy GmbH
Energy transition: A multifaceted challenge for Europe – 2nd symposium
11th June 2014
PAGE 2RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
£200bn - level of investment required over current decade for UK to meet its 2020 energy policy and environmental objectives
The sums required to upgrade the grid are huge, as much as €1 trillion in Europe by 2020
According to the Green Investment Bank Commission, decarbonising the UK economy will require up to £550 bn of investment by 2020
Transformation of European energy sector will require unprecedented investment
PAGE 3RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
Renewable growth is changing the shape of the electricity
system in Europe
1 EEX, RWE Supply & Trading
Germany
France
CH
Netherlands
0
10
20
30
40
50
60
70
00:0
0
12:0
0
23:0
0
0
3
6
9
12
15
18
21German PV
power
production
8 May 20121: Electricity prices and German photovoltaic electricity generation
Electricity prices(hourly contracts of European energy exchanges; in €/MWh)
German PV power generation(in GW)
PAGE 4RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
Source: Investor Relations / Fraunhofer ISE (2012) – indicative costs
Indicative full costs by type €/MWh
0
20
40
60
80
100
120
140
160
180
Onshore Wind
CCGT Offshore Wind
Coal
Fix costs
CO2-Costs
Fuel costs
Other variable costs
Market prices are far away from full costs of any
generation type
PAGE 5RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
It is clear that the traditional utility balance sheet financing
approach will not suffice
Combined 2008 Market Cap: € 590 bn
Combined 2013 Market Cap: € 260 bn
-56%
Market capitalisation of listed top utilities1 [€ bn]
91
68
89
125
5147
28
25
1817
27
Feb 2008
16
GDF Suez
38
Iberdrola
41
25
E.ON EDF
24
Centrica
23
SSE
17 13
FortumRWE CEZ
10
Enel
25
National Grid
33
Nov 2013
3,750
Euro Stoxx 50
3,069
-18%
1 Source: Reuters
PAGE 6RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
RWE Innogy: We develop our future on the basis of our core
values – trust, passion and performance
We are a trusted partner for competitive
renewable energyOffshore Wind
Onshore Wind
Hydro & New Technologies
Services
Partnering Green products
Operational excellence
Our future business models
Focus on partnering
Growing in core markets, increasing profit along the value chain
Business models
Technologies
PAGE 7RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
RWE Innogy is already becoming a trusted partner for the
European energy transition
Greater Gabbard > 504 MW
> 50% shareholder
> SSE lead operator
Rhyl Flats > 90MW
> 50.1% shareholder
> RWE lead operator
Gwynt y Môr > 576 MW
> 60% shareholder
> RWE lead operator
Dogger Bank Forewind
> Up to 9000 MW
> 25% shareholder
Thornton BankC-Power
> 325 MW
> RWE Innogy is largest
shareholder at 26.7%
North HoyleZephyr
> 60 MW
> 33% shareholder
> UKs first project financed
offshore wind farm
(+ other Belgian investment
& industrial companies)
Su
cc
es
sfu
lP
art
ne
rsh
ips
Offshore wind Onshore wind
Jüchen > 7 MW
> Different stakeholders, e.g.employees
RWE Innogy, cooperative Bürger-
Energie, interested municipal utilities
> RWE lead operator
Green Gecco > 5 wind farms in Germany and the UK with
around 80 MW
> 51% Shareholder
> RWE lead operator
Zephyr > 331 MW
> 33% Shareholder
> RWE lead operator
Little Cheyne Court > 60 MW
> 59% Shareholder
> RWE lead operator
Middlemoor& Lindhurst> 54 and 9 MW
> 51% Shareholder
> RWE lead operator
PAGE 8RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
Case Study: Equity strategic partnership – Gwynt y Môr
Gwynt y Môr Offshore Wind Farm
10% 30% 60%
• £2.2 billion investment
• 576 MW
• Completion 2014
PAGE 9RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
Case Study: Equity financial partnership – Greencoat UK Wind
plc
Green Investment Bank Greencoat UK Wind plc
RWE Innogy
Novusmodus LLC (investment company)
Rhyl Flats Offshore Wind Farm
Little Cheyne Court Onshore Wind Farm
24.95%
24.95%
41%
£165.2m total investment
UK Government
59%50.01%
• 90 MW
• Constructed 2009 • 60 MW
• Constructed 2009
PAGE 10RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
Case Study: Non recourse debt partnership – Thornton Bank
Financing
Eq
uit
yC
red
it f
ina
nc
ing
Suppliers
Output
Turbine:
Electrical Engineering:
Installation:
Foundations:
Cre
dit
in
su
ran
ce
Supplier:
Utilities:
Investment funds:
Public:
Private:
Turbines:
Rotor blades:
PPAs:
Green Certificate off take:
Thornton Bank Phase 1-3:
325 MW27% RWEI share
1.3 bn € project financing
PAGE 11RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
Recent changes in regulatory regimes, legislative processes
and political discussion increasingly lead to less reliable
support conditions for RES, delay projects and endanger
investments …
2007 2008 20132009 2011 20122010
Green certificates*Feed-in*Premium* Pool price + ; eligibility for specific incentives*
Significant change
* Status as of
01/10/2013
2014
EU is pushing for competition in RES legislation
PAGE 12RWE Innogy GmbH | Gerd Schräder | 11.06.2014 | Brussels
Investors expectations
> Long-term stable investment climate
> No retroactive changes in legislation
> Necessity to earn back the invested capital to generate new investments
> Investors can manage project and market risks but no regulatory risk
> Avoid regulatory-driven boom and bust cycles
RWE Innogy 6/12/2014 PAGE 13
Gerd Schräder
Regulatory Affairs
RWE Innogy GmbH
Gildehofstr. 1
45127 Essen
+49 (0) 201 12 14075